Should i buy with my name or use the name of a company?

One of the first decisions you must make when purchasing property in the US is under what form you will acquire it. A property can be purchased in a personal name or in the name of a company. The most used for these cases are: the LLC, INC or Corp. Investment properties, almost without exception, must be acquired through the use of a corporation or other entity.

What are the advantages of buying through a company?

• Protects the owner from possible lawsuits related to the property. That is, in the event of a lawsuit, they can only go against that property and not against your other property or personal assets.
• Consolidate all income and expenses attributable to this property within a single entity, this will help reduce the tax impact during the eventual sale of the property.
• Provides flexibility when planning tax payments, in terms of transferring property interests to family members and others.
• It avoids or reduces inheritance taxes, therefore, when the owner of the company dies, the legal entity never dies, thus reducing the amount of inheritance tax.

Should I open a company for each property I buy?

Forming a company for each property is really the most protection you can get. In this way, the investor limits legal liability to each of the properties. If several properties are under the same entity, the liability of one of them could expose the other properties. However, due to the costs of opening, administration and maintenance of these companies, it is common for investors to maintain multiple properties under the same company.

Estimated costs of opening a company to buy a property

• Approximate opening cost between $500-$900
• Annual renewal cost ranges between approximately $200-$400
• Accountant fees for administration and annual tax return (before May 1) depend on the service and structure requested by each client, but range between $500-$1,000

What does it take to open a company?

• Register name
• Mailing address in the United States
• Names of the directors and their respective identifications.
• Prepare company articles of incorporation (accountant’s job)
• Prepare operating agreement (accountant job)

How long does the opening process take?

The process takes between 5-15 business days.

I bought in a personal name, can I transfer it to a company?

It is important that you plan for this before making the transaction; However, if you have already purchased in a personal name, although it is possible to transfer ownership, it is important that you consult with an accountant and/or lawyer to analyze your specific case and determine the possible legal and financial implications. Among them it is important to determine:

• If FIRPTA applies (foreign investors)
• Transfer costs
• If taken as a sale

LEGAL NOTE: These provisions are complicated and require the experience of a CPA and/or real estate attorney to evaluate the potential legal and tax implications. At no time should this information be taken as advice.